Smartphones: Time to Go Direct

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The likes of Dell and Gateway exploded on the PC scene in the late 80s/early 90s by streamlining their supply chain, thinking of themselves as OEM assemblers rather than manufacturers, and selling direct to customers, at the time mostly by phone (we’re talking pre-web era here!). This became known as the Wintel model, where you don’t buy an IBM computer as much as you buy an OS/CPU combo at the best value, the PC brand being a commodity.

25 years later, some players are taking a somewhat similar approach in the smartphone world. And it’s high time this happened.

While big brands such as Samsung and Apple are mostly concerned with higher-end devices and selling through their own expensive retail locations and via mobile operators, newer entrants, from Xiaomi to OnePlus to WileyFox are selling directly online and focusing on bang for the buck rather than chasing incremental features/specs at the top end.

Smartphones as a category are about 15 years old (think Treo, Blackberry) and the iPhone is 9 years old. Everybody in the world but the most destitute has or will soon have a smartphone, and the novelty is gone. It’s hard to make a fashion/hipness statement when everyone has something that looks more or less like the latest phone. The market is shifting to value for the money.

Consumers have been moving away from expensive plans (in effect, vendor financing) to a model where they own their phone with more control and freedom. The big catalyst is of course Android and the fact the whole Linux -> Android -> Cyanogen family tree is open source. In this context, I’m looking forward to see what the first Google-branded phone will look like [update: Pixel is apparently underwhelming].

In summary, these new vendors offer:

  • A focus on user experience/freedom/privacy/control, by removing the usual bloatware and restrictions that come with big name phones tampered by mobile operators.
  • Bang for the buck / value, by picking the sweet spot in terms of hardware (i.e. reasonably powerful but not cutting edge) and bypassing channel intermediaries.

It is likely that after the Cambrian explosion in the Android market, some consolidation will occur. But in the meantime, consumers have the ability to be back in charge with their mobile devices, and that’s a good thing. A couple big incumbent companies cannot be left in charge of decisions that affect most people’s computers and digital life.

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